Wednesday, 22 of November of 2017

Economics. Explained.  

Consumer Confidence

October 31, 2017

The Conference Board reported that consumer confidence surged upwards by 5.3 points in October to 125.9 after rising slightly in September.    The October level of 125.9 was a 17-year high (December 2000).

Lynn Franco, Director of Economic Indicators at the Conference Board said “Consumers’ assessment of current conditions improved, boosted by the job market which had not received such favorable ratings since the summer of 2001. Consumers were also considerably more upbeat about the short-term outlook, with the prospect of improving business conditions as the primary driver. Confidence remains high among consumers, and their expectations suggest the economy will continue expanding at a solid pace for the remainder of the year.”

Confidence data reported by the Conference Board are roughly matched by the University of Michigan’s series on consumer sentiment.   As shown in the chart below, trends in the two series are identical but there can be month-to-month deviations.   Any way you slice it, confidence remains at levels not seen since the early 2000’s.

The consumer should continue to provide support for overall GDP growth in 2018.  The stock market is at a record high level.  Home prices continue to climb.  Consumer net worth is at a record high level and rising.  Jobs are rising by about 170 thousand per month.  The unemployment rate is falling slowly. The consumer has little debt.  Interest rates remain low.  In addition, consumers are likely to get a cut in income tax rates in 2018.  Clearly, the consumer’s optimism is valid.

We anticipate GDP growth of 2.3% in 2017 and 2.8% in 2018.

Stephen Slifer

NumberNomics

Charleston, SC


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